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The second and final tranche of reforms in the Insolvency Law Reform Act 2016 has now come into effect, as key regulators hope to “enhance trust and confidence in the insolvency profession”.
The second tranche of reforms came into effect on 1 September 2017, with the focus on the way funds are handled and introducing new requirements for creditor meetings and practitioner remuneration.
The first tranche of insolvency reforms, which focused on registration of, and disciplinary action against, registered liquidators and registered trustees, was introduced on 1 March 2017, following the passing of the Insolvency Law Reform Act 2016 (ILRA).
The Australian Financial Security Authority (AFSA) and the Australian Securities & Investments Commission (ASIC) have both welcomed the reforms’ aim to increase efficiency, reduce administration costs and promote market competition in personal and corporate insolvency in Australia.
“The insolvency law reforms harmonise the regulatory framework for personal and corporate insolvency and address a number of issues in the insolvency industry and ASIC's role in regulating it,” ASIC commissioner John Price said.
“The changes will enhance trust and confidence in the insolvency profession.”
Likewise, ASFA chief executive and inspector-general in bankruptcy, Hamish McCormick, said the reforms were an important milestone in the rules governing insolvency in Australia.
“These reforms will support a greater level of consistency and standards across both systems. They will also empower creditors to request information from insolvency practitioners,” said Mr McCormick.
ASIC had earlier outlined its enforcement action for the second half of the year, with insolvency practitioners and others who facilitate serious illegal ‘phoenix’ behaviour and improper transactions in the face of insolvency an area of particular focus.